June 17, 2014 (PLANSPONSOR.com) - House Ways and Means Committee members introduced legislation designed to spur more employee-ownership in private industry.
Promotion and Expansion of Private Employee Ownership Act of 2014 (H.R. 4837)
eliminates barriers that a business and its owners currently face in
establishing a new S corporation employee stock ownership plan (ESOP) or
expanding the employee-ownership stake in an S corporation. Congress created
the S corporation ESOP structure to encourage and expand retirement savings,
giving more workers in private companies the chance to own their companies
through an ESOP qualified retirement savings program, the Employee-Owned S
Corporations of America, said in a statement.
the provisions in the bill are measures that will:
owners of S corporations to sell their stock to an ESOP;
the flow of bank capital to ESOP-owned S corporations;
needed technical assistance for companies that may be interested in forming an
small businesses that become ESOPs retain their Small Business Administration (SBA) certification; and
the importance of preserving the S ESOP structure in the Internal Revenue Code.
to the Employee-Owned S Corporations of America, studies have shown that S ESOP
employees have retirement account balances three to five times higher than the
average 401(k) or other defined contribution plans and they are economic
drivers. The 2013 study, “Macroeconomic Impact of S ESOPs on the U.S. Economy,”
also found total direct and indirect output from these companies is nearly 2% of gross domestic product.
from the National Center for Employee Ownership (NCEO) finds the average ESOP
participant has 20% more defined contribution assets than the average
participant in a non-ESOP defined contribution (DC) plan, and on average, ESOP
companies contributed 75% more to their ESOPs than other companies contributed
to their primary DC plan (see "ESOP Companies Contribute More to Employee Savings”).
legislation was introduced in 2011 (see “Lawmakers Introduce Legislation to Promote ESOPs”) and 2013 (see "Bill Would Encourage More S Corporation ESOPs”).
Text of the Promotion
and Expansion of Private Employee Ownership Act of 2014 is here.